Activities related to purchasing and supply management involvement in supplier alliances

Many firms have experienced significant benefits from engaging in supplier alliances. However, alliance relationships do not evolve in isolation. Support factors for supplier alliances include purchasing’s accountability for their actions, the use of information technology, the perceived importance of the purchasing and supply management (PSM) function, and the degree of participation in strategic purchasing activities. In addition, PSM engages in cost and price‐related activities associated with supplier alliances, including total cost of ownership, understanding specific supplier costs, target costing, and market monitoring. Empirical results from a survey indicate that significant relationships exist between support factors, cost and price activities, and supplier alliance involvement by the PSM function. The exploratory findings suggest that support factors must be in place and continually improved to facilitate purchasing’s involvement in alliances. PSM involvement in cost and price activities is also strongly related to supplier alliance participation. For purchasing firms to obtain long‐term benefits from alliances with suppliers, purchasing professionals must continually provide valuable input into these relationships through their corporate influence, use of information technology, and participation in various proactive purchasing activities.